Guy Standing | Rentier Capitalism and Basic Income

please join me in giving a warm welcome to Professor godson [Applause] good evening with these lights I can't see you but I hope that this will be enough to keep some of you still awake you've been listening to a lot of interesting speech speeches and there's nobody more boring than an economist who's just written a book about a subject that he feels strongly about except someone who's written two books on the subject than which he feels strongly about and these really boring so I hope you can stay long enough to listen I'd like to begin by quoting statement made by Teresa made to the Bank of England last November and she said a free-market economy operating under the right rules and regulations is the greatest agent of collective human progress ever created and is unquestionably the best and indeed the only sustainable means of increasing the living standards of everyone in society that means the government believes in free markets they've been building free markets and it produces the best results I think it's difficult to make a definitive judgment on the last point because the second point is alive in fact I'm going to argue that in fact we have the most open free market system ever created go back a little bit this is a moment when we're in the middle of a global transformation those of you who are familiar with karl polanyi's great transformation we'll recognize what's taking place and the dis embedded phase of this global transformation began roughly speaking in about 1980 when a bunch of renegade economists who had formed the Mont Pelerin Society after the Second World War certainly became the flavor of the moment and no less than eight of the 36 original members of the Mont Pelerin Society went on to receive Nobel Memorial Prize in Economics we think of them as neoliberals these days but that's a pejorative term that's come into popular parlance often by non economists but I think you can see the main tenets of their approach they believed in financial market liberalisation the commodification of everything that can be commodified and privatization and very critical to what's been happening ever since the systematic dismantling of all institutions of social solidarity because they stand against the market they prevent the market from clearing as the terminology went and essentially you can see that the Mont Pelerin group put property rights above market forces they actually were not against monopolies because they've presumed that competition would whittle away monopolies and therefore they didn't have to worry about it they also promoted and governments all over the world eagerly accepted a strategy of flexible labor markets what that meant in reality was dismantling the social income that had been built up in the post-war era where more and more of income were being paid in non-wage benefits state benefits community benefits that were beyond the wages now what's happened since they came into dominance in the 1980s with Reagan and with Thatcher and around the world structural adjustment policies that sort of bankers took over that we've just been listening to essentially my thesis in the first of the books which is called a corruption of capitalism is that the income distribution system of the 20th century has broken down and it's broken down irretrievably we didn't really need Thomas Piketty to show that all over the world a rising proportion of national income in country after country going to capital has corresponded obviously with a declining share going to labor that's been taken place as much instead China is in the United States and in Britain and in every area city country to other critical points this has corresponding this period with a technological revolution whatever number you wish to call it I don't mind just come from I have plenty of showers since then I just come from speaking in Davos Davos they decide it's fourth in a technological revolution fourth Industrial Revolution I probably think it's the 24th but never mind the technological revolution has made it much easier for corporations and capital to relocate production and employment and made it much more dominant in bargaining with those who are supplying labor and you have to as economists appreciate that in this period since 1982 now the world's labor supply has effectively quadrupled an extra two billion people have become part of a globalizing labor market and all of those people have been coming from emerging market economies where wages and living standards were one fiftieth of what a typical British or American worker would have regarded as the norm in the 1980s and 1990s so there's been a huge downward pressure on wages in OECD countries and we've had 13 years of stagnant real wages it's a pretty daunting stylized fact at the same time we've had a reversal of what Keynes our predicted in 1936 he said there would be the euthanasia of the rent ei during the remaining years of the 20th century as capital became more abundant the ability of rent seeking would decline in actual fact when you tease these statistics on income and wealth distribution what has been happening is a rising share of capital as being going in forms of rent and a rising share of the diminishing share going to labor has been going in rental forms to the upper income groups in the labor force and in that process and this is what I've been writing about we've had a new global class structure taking place I played on all of you as the future generation of economists not to dismiss class class matters and don't let your teachers your lecturers and your professors pretend otherwise the global class structure as a plutocracy at the top and elite just below them all earning billions and multi-millions below them a celeriac with long-term employment security nice occupational pensions paid this paid that pay bonuses paid their estimate these three groups are earning more and more of their income from forms rent returns to property financial property physical property and most of all intellectual property below the only old working class the proletariat has been disappearing around the world and the welfare states and the trade unions and the labor laws of the 20th century were geared to that group but they are diminishing in strength and numbers and below that it's the precariat I wrote a book in 2011 which has been translated into 20 languages where I said that the precariat is the new dangerous class the progeria can be defined in terms of people being habituated to accept a life of unstable labour without an occupational narrative or trajectory to their lives they have to do a lot of work that doesn't get recorded in are unusable bad labor statistics but they have to do it it consists of millions of people who are increasingly having to rely solely on money wages they don't get access to non-wage benefits they don't get access to right space state benefits and the wages that they have had to receive have been declining in real terms becoming more volatile and uncertain and above all people in the precariat know this around the world they have been losing the rights of citizenship social rights cultural rights economic rights political rights and there's a dangerous class because part of it is atavistic they're the ones backing the neo-fascist populist part of it are what I call nostalgics the migrants the minorities who don't see in the political spectrum anything to represent them so they stay out of it a part of it are the progressives the young who've been going to university and they were promised a future but they come out of university and they have debt and millions of them are finding they have no future this group is the growing group and why I am ultimately optimistic because they won't vote for neo-fascist populist they are realizing they must reinvent a politics of paradise a progressive politics and as their numbers grow and the Occupy movement and the various new political movements gradually taking shape they will define the new progressive politics of the 21st century now I want to go back from that after saying that I have the dubious pleasure of being able to boast but on page one of that book on the precariat I predicted that unless people came to understand what the precariat was all about and address their insecurities we would very soon see a political monster page one you will not be surprised that since November 2016 an incredible number of people have written to me saying your political monster has arrived it will get worse I fear and I think we have to go back to what has been happening to this global market system because the first lie is that we have a free market economy and here I think one has to realize what the finance is we just listen to one but there are lots and lots of others carefully constructed in the 1980s 1990s it's a structure a global architecture which preserves property rights and intensifies property rights and is ultimately responsible for the structural inequalities we're facing today and a key event has not the Bretton Woods institutions but a little organization that was down a road in Geneva where I was working at that time in the United Nations and we laughed at that institution because it sounded like a detergent company it's sort of suggested that if we went there we can make our shirts whiter than white and we loved if you go to Geneva today it's the biggest bureaucracy with a fantastic conference center strutting out into the sky it's called wiper sounds like a detergent right wiper it means the World Intellectual Property Organization and in 1995 led by the US and by Goldman Sachs and various other financial institutions reporting to central bankers they passed trips now trips means the trade-related aspects of intellectual property as a result of trips we had a globalization of intellectual property rights forgive you're just a few statistics they've get a capture of a feeling of what's been happening in 1995 fewer than 1 million patents were filed with wiper last year was the first year of 2016 and reports just come out 2016 was the first year when more than three million patents were filed with WIPO I remind you what they are a patent if you file it and it's accepted gives you a monopoly income for 20 years nobody else can compete nobody else can produce because you've got the patent in pharmaceuticals it's 40 years today there are more than 12 million patents in force around the world and it's been globalized so you got a string of monopolistic practices so the mega corporations and the plutocratic corporations buy up and they hover patents so they have thousands of patents which gives them guaranteed billions of dollars of profits if this is a free market I'm a duck I don't quack very well so this is the first thing and then you add to it that they allow publicly refund funded research to lead to corporations having payments so we as taxpayers are paying to undercut the risk of doing the research so they can't say it is a return to taking risks it's us who are often taking the risks that is a part of it many patents are taken out not to facilitate production but to stop anybody producing it because they don't want a near substitute for what they're producing to be produced in addition it vastly strengthened copyright and the copyright which has multiplied many many times since 1995 it guarantees the owner of a copyright a monopoly income for the whole of their life Plus 70 years in some some cases if it's to do with corporate work it's 95 years again if this is a free market I'm a duck it's not the same with industrial designs which have been multiplying a trademarks are now more than 7 million trademarks as of 2016 all giving monopolistic flows of money this system has been strengthened by more than 3200 I document them in the book 3200 trade and investment agreements if you look at the investment agreements it's mainly about protecting property and at the top of the cake as it were is the is des love acronym is in this business economists have to be expert at acronyms the is des is the investor state dispute settlement and a corporation can sue any government if it introduces any policy which affects their future profits think about it if we were able to do that as individuals you know any government policy change that affected my future income I could go and sue them for reparations corporations can do that today and what makes it slightly more interesting is there are three judges in every case the corporation gets to a point the first judge a government gets the second judge and the corporation must agree on the third judge if I'm not mistaken this sounds like a fixed system especially as if if nobody can agree on that third judge its appointed by the president of the World Bank okay and the president of the World Bank must always be an American citizen so you will be enormous ly surprised that the American government as defendant has never lost a case before the is dienes you know how it happens but that's the case but what's been happening and I'm not going to go into it in detail but I want to throw it out there for potential research as you go through your various levels of degree China has emerged as the biggest rentier economy in the world last year for example China accounted for 98 percent of the increase in patents and in recent years has been filing more patents than the United States Japan South Korea and the whole of European Union combined and you can interpret the Trump type of protectionism and the lashing out as a state of decline in manipulating the institutions of rentiers capitalism now a second lie is that international property rights encourages and rewards risk-taking and facilitates growth not only is research and development largely publicly funded so that's one bit of a lie there is no statistical evidence that intellectual property rights promotes innovation or is associated with increases in economic growth what it is clearly associated with is the development of superstar corporations that are the Hoover's of the Hoover's so the five biggest platform corporations in the United States have systematically bought up any potential rival they bought five hundred and nineteen corporations in the last ten years and in the process of course they are monopolistic and a corporate culture of inter-linkages has been built up the next lie in this claim that there's a free market system is that governments particularly Britain but also many many others have been churning out vast amounts of subsidies in the course of writing the book on the corruption of capitalism I obtained from the Treasury the number of selective tax reliefs in this country this government has built them up so that there are now 1156 forms of tax relief quite a large number systemically I've got the data here with the figures over the last six years of the actual amount these are regressive and basic economics subsidies increases distortions in markets in efficiencies and is regressive the Treasury can't give full numbers on the amount of income for gone by the exchange but they have given figures on the top two hundred and nine of these tax reliefs if I tell you that they came to a total value of four hundred and three billion pounds per year you might get an idea of the scale of subsidies because they're only the tip of the iceberg these type of subsidies there are others as well I won't go into that because I want to get to my final part of the narrative but five four hundred and three billion pounds given out to selective interests means there is much more than the total amount of spending on the National Health Service and our public education it gives you an idea of the scale and the subsidies include a whole lot of other selective measures so the capital today is taxed at a much lower rate than labor and wealth is hardly texted or inheritance tax is disappearing and that's a key aspect of my long-term debate both in the United States in Britain and many other countries they move to tax credits it's extraordinary that every year Britain spends more than 30 billion pounds on tax credits the United States spends about a hundred billion on its burned income tax credit extraordinarily or it should strike us as extraordinarily since they started in the 1990s until today there has been no official evaluation of the effects of tax credits I've been given just five minutes sorry about that but tax credits are a form of spin Underland system keeping wages know much of the tax credit goes to capital the next aspect of this free market economy is the debt has become a systemic mechanism of extracting from the precariat and others I give many quotes from finance leading finances they want all of us to be in debt that's how they make their money it's not a it's not a genius if you can work that out the six an important thing which I'm not going to talk about just flash it by you because it's another area that desperately needs good research is there's been a plunder of the Commons the neoliberal orthodoxy is because the Commons has no price it has no value and therefore you can give it away to property interests we've been losing our Commons we're seeing a plunder of it and the seventh in key point is a claim that many mainstream economists have made to their shame I think which is that work is the best route out of poverty you may have heard that the reality is that 60% of the poor in this can three are in jobs the reality is that wages have been declining and it's harder and harder for people in the precariat to attain or maintain a reasonable standard of living basic laws of economics when I was a student have broken down it used to be the case that when productivity went up wages went up not anymore the jaws of the snake have been opening a lot of figures that have been showing that the second thing it used to me that when employment went up wages went up not anymore because the new jobs the coming up tending to pay much lower wages the Phillips curve has broken down completely and it will continue to break down with the development of platform capitalism and so on it used to be the case that when employment went up tax revenue from employment went up poor old George Osborne found that that didn't work in 2014 tax revenue was going down because more and more people were in the sort of jobs that were paying any tax now here we are in a situation where the income distribution system is not going to come back as you go through to your PhDs and beyond I predict the real wages in OECD countries will not be rising they won't rise and therefore we have to look to build a new income distribution system and why I support a basic income as an economist is that I think a basic income has to be a base an anchor in that new system by itself it's not a panacea whether it's the robots coming and they're going to displace millions or as I believe increase the inequalities and the disruptiveness of the labor market it's not going to overcome this growing crisis of structural inequality a basic income first of all is affordable think about it I've got a whole chapter in the other book on various ways you could pay for it we've just done pilots in India where we provided thousands of people with the basic income modest it resulted in improvements in nutrition in health in schooling in economic activity in women's status it was a transformative policy in rural areas because it led to networking and multiplier effects that we as economists can understand but what touched me most was after we completed and we'd wrote the book and the results have been presented and Sonia Gandhi expressed astonishment and said to us who she wished she'd known last year the Minister of Finance of the Indian government tabled in Parliament the same day as his budget statement saying a basic income is affordable in India can you imagine how I felt that day but we can have it in any country in the world we could have it because it will stimulate work that is not labour it will lead to us inducing more of our time in caring for others for working in the community in ecological work these are valuable forms of work than our conventional economics treats as non work you can't get more sexist than ridiculous than that many of the most valuable forms of activity that all of us would love to do are treated as northern work by mainstream economics think about what the implication is that you are not measuring capturing what millions of people are actually doing or wanting to do the beautiful thing is that a basic income is not a panacea it's part of a package that needs to be developed encourages ecologically sustainable activities rather than resource depleting jobs that's powerful I think I've dealt with the standard objections or end with just one some critics usually very self-respecting critics say oh damn it we don't want to give something for nothing we don't want to give these people something but nothing at the same time they've just inherited a million pounds or dollars from their dying relatives I don't notice them leaping to the barricade saying we must abolish private inheritance which if I'm not mistaken is something for nothing in spades I believe that a basic income will be emancipatory it will give people a sense of security and that's the greatest form of inequality we have today millions of people are facing a life of chronic insecurity maybe some in the room have that feeling or no people with that feeling and unless we have a strategy for overcoming that economic insecurity we're not going to have a healthy politics we're not going to have a healthy society and we're not going to be personally healthy we can do better than that thank you very much [Applause] that was a very insightful and challenging address and I think it's put into perspective a lot of different things for us so thank you very much for that we've got time for a few more or a few questions probably about two we'll start with the most popular one and that's when wvp you delegate whoever you are what do you think are the most important assets for countries fighting income distribution inequalities the questions are down there as well yeah um I think I've never answer it in one way and I can see another way as of answering it as well so I hope I get the gist of it I think we've got to realise that this system of rentier capitalism is giving these plutocrats and the elites and other upper income groups fantastic rental income and I believe that we must build sovereign wealth funds capital funds call it what you like based on a levy on all forms of rent you can't justify rent from an economic perspective or from a moral perspective if we build a sovereign wealth fund like the Norwegians have done they used North Sea oil whereas Britain stupidly privatized it so that today no way Norwegians are actually all millionaires so if you're looking for a husband or a wife focus on a Norwegian they have developed a fantastic scheme a system and I described it in the book where they applied the Hartwick rule an economic rule which says that any resource should only be used and for the benefit of today's generation as long as it also benefits future generations the complex formula for doing that but the Norwegians apply it I think we should now build our fund in this country from collecting the rent I think you could do that by rolling back subsidies and various other ways which I've described in the book a sovereign wealth fund like say that they've used in Alaska but the Alaska Permanent Fund can be used to pay out the basic income it's the best way of affording it and I think the asset of property is where we have to focus on raising more income land value tax a carbon tax that sort of thing focusing on those things which are not income for sale I think we run out of time for questions if option which is a good incentive for innovation I think Thomas Jefferson said in 1813 he said ideas in nature should not be the subject of property so in principle I'm against patents copyright and so on the argument that they give incentives can be met with other forms of rewards for inventions proper inventions prizes government you know action you don't need heavy-duty patents that are just blanket if you have copyright under Queen Anne which was rather a long time ago they were first introduced when they would only give a guarantee to the owner of a copyright for 14 years I would say that's probably a good a good maximum for an artist or a poet or a writer that means they will have their income from their creations but to make it for the whole of your life Plus 70 years is just just crazy okay well that brings us to the

  1. "You are a worker, and you will work for the greater good of the state. Work needs to be done, and workers like you need to do it. Basic Income is slavery, because freedom is slavery. Do not aspire to follow your dreams. Your cubicle awaits you, comrade!"
    ~ Bernie Sanders, 2019

  2. Professor Standing has, it seems, studied Henry George at some point in his formal education (or, more likely, after he completed his formal education). I have posted comments to the video of a 2017 World Economic Forum panel discussion that included Professor Standing.

    My main observation, one that Professor Standing may have dealt with in his books and other writings, is the problem of the market capitalization of rents that are not directly taxed. Increase individual and household income without increasing the supply of affordable housing opportunities and the increase in disposable income will end up in the pockets of landlords. As land prices increase so will the cost of affordable housing offered for sale.

    He mentions his support for the taxation of land values. This is central to dealing with income and wealth concentration. Absent this reform in how public revenue is raised, communities must find the revenue from somewhere (e.g., from the taxation of unearned income derived from the sale of financial assets or land) to subsidize the construction of affordable housing.

  3. we dont have a free market. we live in a world of monopolies. the governments support monopolies with billions of pounds more than an unconditional basic income would cost. we have free rule of profit which destroys our planet, but what we need is free market of ideas to save our planet. to have this true freedom, we need to free people from the hamster wheel of being slaves to the accumulation of some peoples profits and monopolies. part of how to do that is unconditional basic income.

  4. Our current system has clearly failed. The rich don't care since they can just sit back on their private yachts sipping drinks whilst everyone else starves or wastes their lives away working meaningless jobs.

    A Basic Income is needed badly. Otherwise more and more human potential will go completely wasted.

  5. Last QA: Inventions and inventors are solely driven by passion and not by thinking 'I can patent this' and become a millionaire. This is where the systematic greed takes over and halting the process of the evolution in society. We have seen this happening over and over.

  6. "Free market" capitalism is a lie alright … oh yes, that's true, as it benefits only the wealthy at the expense of the poor and the environment.

  7. First, I have to get over that name … his parents must be having a laugh … now to actually watch this video …

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